Layer 2 expansion proposal

Privacy-preserving Layer 2 solution

HPB Foundation has published a blue paper and code detailing a Layer 2 protocol for greater privacy with high transaction throughput inspired by PriBank. This Commit-and-Prove Zero-Knowledge Proof Protocol provides a level of privacy and efficiency closer to what you'd expect of a bank, with low gas fees. The privacy benefit here is that the user's wallet balance and value transacted remain private, yet this solution can still be supervised by the operator to prevent money laundering.

Blue Paper

View the mathematics of the solution here:

http://layers2.com/assets/pdf/Layer2_en.pdf

Code

See a simple implementation in Go here:

https://github.com/hpb-project/HPB-layer2

Website

http://layers2.com

Processing and results

Privacy-preserving zero-knowledge proofs require extra computation, which could lead to very high gas fees on Ethereum. HPB's proposed Layer 2 privacy solution manages the required computation at lower cost. The test results prove that the scheme can deliver added privacy, but the pre-processing stage of zero-knowledge proofs will need refinement. This is experimental and open source, so others can take this work and adapt it.

Layer 2 explained

Customers always prefer a faster service and often prefer privacy. However, both are problematic for users of the Ethereum Layer 1 blockchain. So, a Layer 2 scaling solution is needed. Layer 2 does not necessarily imply a second blockchain and additional equipment. A Layer 2 solution can operate at the level of smart mathematics and code in a smart contract/s deployed on the Layer 1 blockchain, which would be the case with HPB's proposed Commit-and-Prove Zero-Knowledge Proof Protocol.

With Ethereum, a Layer 2 solution may run a parallel blockchain executing and bundling up transactions. Layer 2 solutions periodically post the cryptographic proof of such bundled transactions to the Ethereum MainNet, so greatly reducing the number of transactions needing expensive ETH for gas. The benefits are higher transaction speed and very significant gas fee savings. High Performance Blockchain already offers these benefits and constantly seeks to improve!